NLMK Q2 2012 US GAAP

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NLMK's Q2 2012 Financials.

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NLMK Q2 2012 US GAAP

  1. 1. NLMKQ2 AND 6M 2012 US GAAP CONSOLIDATED RESULTS Moscow, August 9, 2012
  2. 2. DISCLAIMERThis document is confidential and has been prepared by NLMK (the “Company”) solely for use at the investor presentation of the Company and may not bereproduced, retransmitted or further distributed to any other person or published, in whole or in part, for any other purpose.This document does not constitute or form part of any advertisement of securities, any offer or invitation to sell or issue or any solicitation of any offer to purchaseor subscribe for, any shares in the Company or Global Depositary Shares (GDSs), nor shall it or any part of it nor the fact of its presentation or distribution form thebasis of, or be relied on in connection with, any contract or investment decision.No reliance may be placed for any purpose whatsoever on the information contained in this document or on assumptions made as to its completeness. Norepresentation or warranty, express or implied, is given by the Company, its subsidiaries or any of their respective advisers, officers, employees or agents, as to theaccuracy of the information or opinions or for any loss howsoever arising, directly or indirectly, from any use of this presentation or its contents.This document is for distribution only in the United Kingdom and the presentation is being made only in the United Kingdom to persons having professionalexperience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the“Order”) or high net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(2) of the Order (all suchpersons together being referred to as “relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or any of itscontents.The distribution of this document in other jurisdictions may be restricted by law and any person into whose possession this document comes should informthemselves about, and observe, any such restrictions.This document may include forward-looking statements. These forward-looking statements include matters that are not historical facts or statements regardingthe Company’s intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity,prospects, growth, strategies, and the industry in which the Company operates. By their nature, forwarding-looking statements involve risks and uncertaintiesbecause they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward-looking statementsare not guarantees of future performance and that the Company’s actual results of operations, financial condition and liquidity and the development of theindustry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements contained in this document. Inaddition, even if the Company’s results of operations, financial condition and liquidity and the development of the industry in which the Company operates areconsistent with the forward-looking statements contained in this document, those results or developments may not be indicative of results or developments infuture periods. The Company does not undertake any obligation to review or confirm analysts’ expectations or estimates or to update any forward-lookingstatements to reflect events that occur or circumstances that arise after the date of this presentation.By attending this presentation you agree to be bound by the foregoing terms. 2
  3. 3. HIGHLIGHTSQ2 ‘12 FINANCIAL RESULTS EPS 0,05 $/share• Revenue $3,257 m (+5% q-o-q) 0,05 0,04 0,04• EBITDA $596 m (+38%), 0,03 0,03 0,03• EBITDA margin 18.3% (+4.3 п.п.) 0,02• EPS 0,046$ (+61%), net profit margin of 8.5% (+2.9 p.p.) 0,01• Operating cash flow: $304 m (-39%) 0,00• Capex: $453 m (+27%) Q3 2011 Q4 2011 Q1 2012 Q2 2012• Net debt/12M EBITDA: 1,90Q2 ‘12 OPERATING RESULTS• Steel output: 3,843 m t (+6%) EBITDA MARGIN 20% 18% 16%-18%• Steel sales: 3,817 m t (-1%) 15% 14% 14% incl. NLMK Int’l sales of 1,128 m t (0%) 12%• Revenue/t $853 (+7%) 10%• Slab cash cost at Lipetsk plant: $411/t (+4%) 5% 0% Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012E 3
  4. 4. PRODUCTIONQ2’12 OUTPUT UP 6% Q/Q CRUDE STEEL PRODUCTION, QUARTERLY• Novolipetsk (Steel segment) 3,130 m t (+6% qoq) 4 million t 3.6 3.8 ~3.8 3,5 3.2• NLMK Long Steel 0.465 m t (+10% qoq) 3 2.9• NLMK USA 0.181 m t (-8% qoq) 2,5 2 1,5CAPACITY UTILIZATION OF 96% 1 0,5• Lipetsk plant (Steel segment) 99% (+2 pp) 0• NLMK Long Steel 85% (+8 pp) Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012E• NLMK USA 94% (-6 pp) Steel Segment Long Segment Foreign Rolled ProductsOUTLOOK• Q3’12 steel output to remain flat at 3.8 m t CAPACITY UTILIZATION Novolipetsk 99% 97% NLMK Long 85% 77% NLMK USA 94% 100% 0% 20% 40% 60% 80% 100% 120% Q2 2012 Q1 2012 4
  5. 5. MARKETSDEMAND IN Q2’12 GLOBAL STEEL RUN RATE AND STEEL STOCK LEVELS 85%• Steel consumption in Russia grew 7% qoq 1,2 Index, Jan 2011 = 1• Demand in the global markets remained weak 1,1 80% 1 75%PRICING ENVIRONMENT 0,9 70% Run rate (RHS)• In Russia prices impacted by weaker RUB/US$ FX rate 0,8 Germany stocks (LHS) 65% 0,7 Chinese stocks (LHS)• US prices were lower by 1-4% qoq USA stocks (LHS) 0,6 60%• European prices under pressure from unstable economic Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 conditions RUSSIAN STEEL CONSUMPTION (LEFT) NLMK MARKET POSITION (RIGHT) AVERAGE SELLING PRICES (INDICATIVE) BY REGION 7 million t per % NLMK steel production share in Russia 1000 $/t Quarterly dynamics month in Q2 was 20,4% adjusted for 6 900 production/sales cycle 5 800 4 700 3 100% 600 84% 2 500 HRC Export FOB 1 33% 400 HRC US domestic, FOB 24% 18% 24% 11% 19% EU domestic, EXW 0 300 Pre-painted HDG GO NGO CRC HRC Re-bar Metalware июн-12 Jan-11 Feb-11 Mar-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Steel production Steel products consumption Source: Steel Business Briefing 5
  6. 6. SALES GEOGRAPHYDOMESTIC SALES REVENUE BY REGION $ million• Domestic sales share up 4 pp to 32% 353 3 000 253 337 168• Revenue from domestic sales up 10% to $1.2 bn 266 353 359 332 361 527 494 458 2 000 364 269 191 878 273EXPORT SALES 698 740 634 1 000• Decline in US sales as competition intensified 1 308 902 1 057 1 163• Seasonally weaker sales in the M.East -• Decreasing sales in EU Q3 2011 Q4 2011 Q1 2012 Q2 2012 Russia EU M.East (incl Turkey) N.America Asia Other SALES BY REGION 4 million t 0,30 0,37 0,26 0,36 0,63 0,55 3 0,20 0,83 0,56 0,63 0,61 0,50 0,38 0,33 2 0,47 0,34 0,68 0,83 0,75 0,56 1 1,11 1,06 1,10 1,20 0 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Other Asia N.America M.East (incl Turkey) EU Russia 6
  7. 7. SALES STRUCTUREGROWTH IN VALUE ADDED GRADES Q2 ‘12 REVENUE AND SALES BY PRODUCT• Significant growth of construction steel driven by 100% 4% 2% Pig iron seasonally strong demand in Russia 90% 22% 14% Slabs 80% HRC• Growth in electrical steel sales from better demand in 70% 22% Plates domestic and international markets 60% 26% 8% CRC 50% 13% HDGDECREASE OF ORDINARY GRADES 40% 7% High value added 9% Pre-painted 14% products• Decrease of third party sales of slabs as intersegmental 30% Share in 2% 4% NGO 8% 20% revenue – Transformer trade went up 2% 2% 44% 8% 10% 2% Rebar 10% 10%• Drop in merchant pig iron as demand deteriorated 0% 2% Metalware Sales Revenue Other• HRC sales came under pressure from growing competition SALES BY PRODUCTS Q2 ‘12 SALES STRUCTURE DYNAMICS 4 million t NGO 30% 1,11 1,00 Metalware 3 0,80 1,15 23% Long steel 20% 0,39 0,47 0,37 GO 17% 0,33 2 Pre-painted 14% 1,32 1,34 1,37 1,26 CRC 4% 1 HDG -1% 1,03 0,97 Slabs -4% 0,89 0,82 HRC -5% 0 Plates -11% Q3 2011 Q4 2011 Q1 2012 Q2 2012 Pig iron -36% Semi-finished Long steel Value added flat Flat steel -40% -20% 0% 20% 40% 7
  8. 8. PRODUCTION COSTS• Change in input mix (growth in pellets consumption COST OF GOODS SOLD DYNAMICS 2600 $ million and imported coal) was impacting costs 2 367 2400 2 210 2 205• Lower RUB FX rate (c. 75% of costs) and growth in own 2200 2 163 feedstock mitigated costs’ growth 2000 1800• Decline in segmental production cost on the back of 1600 raw material prices softening 1400• Long steel segment COGS grew as output increased 1200 1000 Q3 2011 Q4 2011 Q1 2012 Q2 2012 PRODUCTION COSTS BY SEGMENTS CONSOLIDATED PRODUCTION COSTS IN Q2 2012 Iron ore 11% Consolidated production costs 2 205 2 210 12% 11% Coal / coke 19% Intersegmental operations 878 Scrap 15% 806 11% Ferroalloys 4% 84 19% Mining segment 0,8% 4% 74 Materials 18% Long products segment 387 Electric energy 7% 272 7% Natural gas 4% Foreign rolled products segment 952 15% 919 18% Other energy 0.8% 4% Steel segment 1 660 Other costs 11% 1 751 Labor 12% Q2 2012 Q1 2012 - 1 000 2 000 3 000 $ million 8
  9. 9. PROFITABILITYQ2’12 EBITDA GREW + 38% Q/Q SEGMENTS CONTRIBUTION TO EBITDA: Q1 VS Q2’12• Improved product mix and stable production costs 700 $ million +30 650 +152 +21PROFITABILITY BY SEGMENT +5 600 550 596• Steel: Growth in domestic sales supported better 500 -44 product mix 450 400 432• Long: Sales volumes growth, improved product mix, 350 300 usage of own billets as a feedstock 250 200• Foreign assets: Average selling prices growth, costs Q1 2012 Q2 2012 segment Foreign RPS Long steel Mining Other Steel under control• Mining : Sales growth, COGS firmly low NLMK GROUP EBITDA margin SEGMENTS CONTRIBUTION TO Q2’12 EBITDA20% 16%-18% 700 $ million 247 60015% -14 596 500 400 50 31810% 18% 300 14% 14% -5 12% 2005% 1000% 0 Segment Segment Q2 2012 Foreign RPS segment Other Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012E Mining Steel Long 9
  10. 10. CASH FLOW OPERATING CASH FLOW Q2’12 CASH BRIDGE • Decreased due to seasonal stocks build $ million CHANGE IN CASH • Change in product mix -157 FINANCING CASH FLOW FX rate change +31 • Net cash inflow of $110 m Dividends o as the company used its credit lines to repay short -113 term debt and for corporate purposes FREE CASH FLOW -74 o Paid dividends Other financial operations -156 Net loans +231 PPE -453 Operating and financing cash flow and investments $ million OPERATING CASH FLOW 304800 Profit tax -84400 Other non cash operations -53 0 Working capital change -155-400-800 EBITDA 596 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Operating CF Financing CF Investments 10
  11. 11. DEBTDEBT POSITION CHANGE IN DEBT PORTFOLIO• Gross debt $4.34 bn (-3%) $6 $ billion 0,4 -0,1 -0,4• Cash and equivalents1 $0.78 bn (-17%) $5• Net debt / 12M EBITDA 1,90 $4 1,8 2,0 $3• Balanced debt and cash position $2RATINGS 2,7 ST Debt LT Debt 2,4 $1• Investment grade from three rating agencies $0 31 March 12 Loans Payments FX rate and 30 June 12 other factors FINANCIAL DEBT BY CURRENCY 2 CASH AND CASH EQUIVALENTS BY CURRENCY2 RUB RUB 32% 40% 37% 47% $US US$ Euro Euro 13% 31%1. Cash, cash equivalents and short term deposits2. As at 30.06.2012г. 11
  12. 12. MATURITY DEBT MATURITY SHORT TERM DEBT MATURITY PROFILE 1 • Short term debt $1.97 bn 2,5 $ billion • Short term part of PXF, SIF obligations, 0.5 2,0 2.375 • Payment of RUB three year notes 1,5 0.8 • Long term debt $2.372 bn 1,0 • RUB three year notes, long term part of PXF, 0.7 0,5 and ECA facilities 0.3 0,0 • Long term obligation of SIF Q3 2012 Q4 2012 Q1 2013 Q2 2013 INTEREST EXPENSE4 LONG TERM DEBT MATURITY PROFILE 2 70 $ million $2 000 $ million 1,892 60 $1 800 $1 600 50 $1 400 40 $1 200 1,054 $1 000 892 30 $800 20 $600 481 $400 10 $200 0 $0 Q3 2011 Q4 2011 Q1 2012 Q2 2012 2012 2013 2014 2015 and onward1. The ST maturity payments include interests accrued and bond coupon payments in 20122. .The maturity payments do not include interests PXF Notes ECA EBRD SIF Other3 At the exchange rate as of 30.06.2012 124. Quarterly figures are derived by computational method based on reporting data for the 6M, 9M, 12M 2011 and for the 3M, 6M 2012.
  13. 13. SEGMENTS 13
  14. 14. STEEL SEGMENT (1)HIGHER PROFITABILITY FOR THE SEGMENT Q2 SALES AND REVENUE STRUCTURE• EBITDA margin +14% or 6 p.p. up q-o-q, due to 000’t 2 220 $ 1 816 Pig iron 100% million 6% 3% • Improved product mix 90% Slabs 24% • Growth in domestic sales 80% 38% HRC 70% CRC • Lower COGS 60% 17% HDG 50% 15% 21% PC 40% High value 7% 30% added 9% Transformer 17% products 20% 7% Dynamo 6% 4% 10% 3% 3% 6% 0% 0%3% 10% Coke (trading) 0% Sales Revenue Others REVENUE AND EBITDA MARGIN Q1 SALES AND REVENUE STRUCTURE $ billion 18% 000’t 2 353 $ 1795 Pig iron 1,89 100% 5%2,0 1,79 1,82 16% 9% million 90% Slabs 14% 14% 80% 27% HRC1,5 12% 37% 11% 70% CRC 10% 60% 19%1,0 8% 8% HDG 50% 6% 22% 16% PC 0,42 0,46 40%0,5 0,33 4% High value 30% added 8% Transformer 2% 20% 16% products 8% Dynamo0,0 0% 6% 6% 10% 3% 3% Q4 2011 Q1 2012 Q2 2012 2% 5% 0% 0%3% 5% Coke (trading) 0% Revenue from third parties (LHS) Sales Revenue Others Intercompany sales (LHS) EBITDA margin (RHS) 14
  15. 15. STEEL SEGMENT (2)PRODUCTION EXPENSES -5% Q/Q CASH COST AND FOREX RATE DYNAMICS 35 • RUR/US$ FX rate marked decline in production costs, as 450 $/t 411 RUR/$ 395 34 c. 90% costs RUB related 400 33 350 294 32 • Slab cash cost (+4%), on pellets consumption and 300 262 31 250 imported coal increase, and high scrap prices 200 30 150 29 100 28 50 27 0 26 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Q1 2012 Q2 2012 Slab Coke BOF STEEL CASH COST FOR GLOBAL PRODUCERS SLAB CASH COST Coking coal and coke 30%700 $/t production 57 Iron ore materials 21%600 124 Scrap 12% 31500 Other materials 8% 17 $411/t400 Novolipetsk 18 Electricity 4% Natural gas 4%300 31 85 Personnel 7%200 48 106 113 120 127 134 141 1 8 43 15 22 29 36 50 57 64 71 78 85 92 99 Other expenses 18% 100 mtpa 260 mtpa 500 mtpa 550 mtpa Cumulative capacity of BOF production 15
  16. 16. LONG PRODUCTS SEGMENT (1)REVENUE +20% SALES STRUCTURE AND REVENUE IN Q2 2012• Increase in domestic demand and high capacity utilization ‘000 t 497 $ million 500 28 after start of EAF 77 400 329 ScrapPROFITABILITY + 5 P.P. 300 10 Metalware• Increased sales, better product mix and lower specific 57 Long products 200 390 production costs Billets 259 100 Others 0 2 4 1 0 Sales Revenue SEGMENT’S REVENUE AND EBITDA SALES STRUCTURE AND REVENUE IN Q1 2012350 $ million 329 25% 500 ‘000 t $ million 299 20% 404 275280 259 15% 400 19 10% 63 275 Scrap 204210 10% 5% 300 Metalware 8% 162 7 4% 0% 47 126 200 Long products140 -5% -11% -10% 322 Billets 73 70 -15% 100 218 Others -20% 4 0 -25% 0 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Sales Revenue Revenue from 3-rd parties (LHS) Revenue from intercompany sales (LHS) EBITDA margin (RHS) 16
  17. 17. LONG PRODUCTS SEGMENT (2)PRODUCTION COSTS + 42% CASH COST AND FOREX RATE DYNAMICS• Soared sales to 3-rd parties $/t 35 RUR/$ 500 444 453 34• Seasonal growth of internal operations (scrap supplies 33 400 32 to Lipetsk site) 300 31• Billets costs up 2% to $453/t on FX rate and scrap prices 30 200 29 28 100 27 0 26 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Q1 2012 Q2 2012 Billet cost BILLET CASH COST AT NSMMZ* 0% Scrap 78% 4% 1% 10% Electricity 7% 7% Ferroalloys 4% $453/t Natural gas 0% 78% Labor 1% Other materials 10% * NSMMZ – key steel production plant of the Long Products segment 17
  18. 18. MINING SEGMENT DYNAMICS OF IRON ORE CONCENTRATE SALES ANDSEGMENT’S REVENUE PRODUCTION COST• Growth driven by higher sales incl. third party sales. This 5,0 million t 25 $/t 21 22 was partially offset by the decline in iron ore price 4,0 20PRODUCTION COST 0,90 0,48 3,0 15• Cash costs insignificantly grew due to inflation influence 2,0 10 on the expenditure components of the segment (mining 3,00 3,01 1,0 5 and beneficiation) 0,0 0• Stoilensky remains one of the most efficient producers in Q1 2012 Q2 2012 Q1 2012 Q2 2012 the world with a production cost of $22/t and EBITDA Sales to the 3-rd parties Iron ore concentrate margin of 69% Sales to NLMK EVALUATION OF IRON ORE CONCENTRATE PRODUCTION COST SEGMENT’S REVENUE AND EBITDA IN THE WORLD $140400 360 80% $/t $120 $/t300 281 274 75% $100 $80 73% 69%200 69% 70% $60 86 $40 STOILENSKY100 65% 36 $20 1 0 60% $0 Q4 2011 Q1 2012 Q2 2012 0 500 1 000 1 500 Revenue from 3-rd parties (l.h.) Cumulative capacity of iron ore beneficiation Revenue from intercompany sales (l.h.) EBITDA margin (r.h.) 18
  19. 19. FOREIGN ROLLED PRODUCTS SEGMENT (1)PROFITABILITY OF THE SEGMENT SALES STRUCTURE AND REVENUE OF NLMK USA• EBITDA margin about 0% in Q1 and Q2 due to: 600 ‘000 t mln $ million ‘000 t $ million 485 • Active sales strategy on the volatile Europe 387 433 374 102 Others market 400 2 82 19 128 90 • Slight increase in Q2 sales prices 105 75 Coated steel 107 92 • Continuous reduction in production cost 200 CRC 256 245 187 188 HRC 0 Sales Revenue Sales Revenue Q2 2012 Q1 2012 SEGMENT’S REVENUE AND EBITDA SALES STRUCTURE AND REVENUE OF NLMK EUROPE1,2 ‘000 t $ million ‘000 t $ million $ billion 800 6961,0 642 612 Semi-finished 15 615 150,8 600 17 15 Plate 2920,6 260 286 270 HRC 0,989 1,026 4000,4 0,909 CRC0,2 252 153 268 197 200 39 31 Coated steel0,0 -0,010 -0,005 27 27 -0,117 89 104 94 92 Q4 2011 Q1 2012 Q2 2012 0 0 12 11 Others-0,2 Sales Revenue Sales Revenue EBITDA Sales revenue from the 3-rd parties Q2 2012 Q1 2012 19
  20. 20. FOREIGN ROLLED PRODUCTS SEGMENT (2)PRODUCTION COSTS EURO EXCHANGE RATE DYNAMICS• COGS up 4% due to 1,36 $/EUR 1,34 • Marginal slab price increase for EU 1,32 • US$/EUR exchange rate decrease for EU 1,30 1,28 operations 1,26 1,24 • Softer scrap prices for N. American assets 1,22 • N.American assets consumed more slabs from 1,20 1,18 Novolipetsk Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12• 6% qoq growth in internal slab sales to the Segment to 0.75 m NLMK INDIANA CASH COST OF SLAB Scrap 75% 12% 3% 0% Electric energy 4% 6% 4% Ferroalloys 6% $600/t Natural gas 0% 75% Personal costs 3% Other materials 12% 20
  21. 21. CAPEX &OUTLOOK 21
  22. 22. CAPEXGROWTH IN CRUDE STEEL CAPACITY CAPEX• Blast Furnace #7 / BOF3,4 m tpa project completed. 100% $ million 2500 Utilisation rates are increasing. 80% 2000• Improved steel quality, +30 new steel grades 76% 74% 60% 81% 82% 1500• Kaluga mini mill (1,5 m tpa of long steel) expected to 87% 40% 1000 launch Q2 2013. 20% 500FINISHED PRODUCTS OUTPUT GROWTH 24% 19% 13% 18% 26% 0% 0• Growth in rolling capacity to produce value added 2008 2009 2010 2011 2012E products Maintanance Development• Improved quality of the existing (incl niche) productsVERTICAL INTEGRATION• Iron ore capacity growth with continued expansion of CAPEX BY SEGMENT, 2012 (E) Stoilensky• Coal deposits projects ongoing 11%• Expansion of scrap capacity Steel SegmentIMPROVED EFFICIENCY 20% Long Segment• Growth of self-sufficiency and efficient use of energy 52% Mining Segment 17% Foreign RPS 22
  23. 23. OUTLOOKPRODUCTION• Q3 2012 steel output to remain flat at 3.8 m t• 12M 2012: 15 m t, + 25% yoyFINANCIALS• Q3 Revenue down by 5-10% qoq on lower market prices• EBITDA margin to stay at 16-18% as costs are also down• Results will depend on the input material prices and FX rate movementsMARKET OUTLOOK• Seasonal slowdown in international markets in Q3 to be aggravated by the sluggish macroeconomic conditions• Q3 steel prices on the record low levels since early 2012• Stable demand in the domestic market 23
  24. 24. APPENDICES 24
  25. 25. SEGMENTAL INFORMATION Q2 2012 Intersegmental Foreign rolled Steel Long products Mining All other Totals operations and Consolidated (million USD) products balances Revenue from external customers 1 816 1 026 329 86 0 3 257 3 257 Intersegment revenue 462 162 274 899 (899) Gross profit 1 168 35 124 516 0 1 843 (11) 1 832 Operating income/(loss) 237 (56) 29 230 (0) 439 (14) 425 as % of net sales 10% (5%) 6% 64% 13% Income / (loss) from continuing operations before 348 (61) (31) 238 0 495 (220) 275 minority interest as % of net sales 15% (6%) (6%) 66% 8% 1 Segment assets including goodwill 13 319 3 973 2 488 2 042 54 21 875 (4 773) 17 103 Q1 2012 Intersegmental Foreign rolled Steel Long products Mining All other Totals operations and Consolidated (million USD) products balances Revenue from external customers 1 795 989 275 36 3 094 3 094 Intersegment revenue 423 73 281 776 (776) Gross profit 378 17 54 228 (0) 677 30 708 Operating income/(loss) 78 (63) 7 203 (0) 225 30 255 as % of net sales 4% (6%) 2% 64% 8% Income / (loss) from continuing operations before 113 (63) (23) 127 (1) 154 20 174 minority interest as % of net sales 5% (6%) (6%) 40% 6% Segment assets including goodwill 2 14 281 4 329 2 769 2 217 59 23 655 (5 047) 18 6091 as at 30.06.20122 as at 31.13.2012 25
  26. 26. QUARTERLY DATA: CONSOLIDATED STATEMENT OF INCOME Q2 2012 Q1 2012 Q2 2012/Q1 2012 6M 2012 6M 2011 6M 2012/6M 2011 (mln USD) +/- % +/- % Sales revenue 3 257 3 094 163 5% 6 351 5 341 1 010 19% Production cost (2 205) (2 210) 5 (0%) (4 415) (3 250) (1 164) 36% Depreciation and amortization (171) (177) 6 (3%) (348) (259) (89) 35% Gross profit 881 708 174 25% 1 589 1 832 (243) (13%) General and administrative expenses (100) (136) 36 (26%) (237) (181) (55) 31% Selling expenses (312) (280) (31) 11% (592) (427) (164) 38% Taxes other than income tax (44) (36) (8) 21% (81) (71) (9) 13% Operating income 425 255 170 67% 680 1 153 (473) (41%) Gain / (loss) on disposals of property, plant and equipment (37) (0) (37) (37) (22) (15) 68% Gains / (losses) on investments (1) 0 (1) (1) (13) 12 (93%) Interest income 6 6 (0) (6%) 12 19 (6) (34%) Interest expense (14) (0) (14) (14) (14) Foreign currency exchange loss, net (18) 21 (39) 2 31 (29) (92%) Other expense, net (1) (31) 30 (95%) (32) 3 (36) 0% Income from continuing operations before income tax 359 251 108 43% 610 1 170 (560) (48%) Income tax (84) (77) (7) 9% (161) (252) 91 (36%) Equity in net earnings/(losses) of associate 0 0 0 201% 0 53 (53) (99%) Net income 276 174 102 59% 449 972 (523) (54%) Less: Net loss / (income) attributable to the non-controlling interest 2 (1) 3 1 8 (6) (82%) 0% Net (loss) / income attributable to OJSC Novolipetsk Steel stockholders 278 173 105 61% 451 979 (529) (54%) EBITDA 596 432 164 38% 1 028 1 411 (383) (27%)* Q1 2012, 6M 2012, 6M 2011, are official reporting periods. Q2 2012 figures are derived by computational method. 26

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